ACCA F8 - Audit and Assurance Revision Kit 2016

57 During the previous audit, the audit team had recommended SouthLea’s management to ensure that any
amendments to standing data on the wages system are reviewed by an authorised manager.
Which of the following is a test of control designed to provide evidence that the recommended internal
control is operating effectively?
Review overtime lists for evidence of authorisation
Review the log of amendments to standing data for evidence of review
Perform a proof in total using the number of employees and average wage
Obtain printouts of employee wage rates and compare these to HR records
58 SouthLea’s finance director mentioned to you that an allegation of suspected fraud had been made against a
member of the senior management team during the year. This is currently being investigated by the internal
audit team and the finance director hopes that the audit may shed further light on the matter.
Which of the following statements about the responsibilities of external and internal auditors with
regards to fraud are correct? (Select as many statements as you think is appropriate.)
The external auditor must maintain an attitude of professional scepticism throughout the audit,
recognising the possibility that a material misstatement due to fraud could exist.
The internal auditor must always consider the potential of management overriding controls and
modify their audit procedures accordingly when performing internal audit engagements.
It is not the responsibility of the external auditors to detect fraud within a client.
The work of internal auditors in reviewing the company’s internal control systems helps management
to fulfill its responsibility for preventing and detecting fraud.
59 SouthLea has an internal audit department of six staff. The chief internal auditor appoints staff within the
internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief
internal auditor. The chief internal auditor reports directly to the finance director. The chief internal auditor
decides on the scope of work of the internal audit department. SouthLea does not currently have an audit
committee.
Which of the following recommendations are appropriate in increasing the independence of SouthLea’s
internal audit department? (Select as many recommendations as you think is appropriate.)
(1) The chief internal auditor should be appointed by the board of directors.
(2) The chief internal auditor should report to the board of directors.
(3) The finance director should decide on the scope of the internal audit work
(1) and (2) only
(1) and (3) only
(2) and (3) only
(1), (2) and (3)
60 You have been told by the finance director that the senior management team is looking to upgrade the
company’s computerised accounting system in a year’s time. This is partly because the senior management
team believes that due to the increasing size and complexity of the business, the company will need more
robust general IT controls in the future.
Which TWO of the following are general IT controls?
Full testing procedures using test data when developing computer applications
One for one checking
Disaster recovery procedures
Hash totals
Questions 29